Group Of Nuns Attacks Goldman Over Large Bonuses

It's not
just pitchfork-wielding populists, politicians, and bloggers
complaining about big Goldman Sachs (GS) bonuses. Nuns are after
them, too.

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BOSTON, MA. & NEW YORK CITY///October 14, 2009///Goldman
Sachs is issuing its much anticipated earnings announcement on
Thursday (October 15, 2009), and is expected to set aside up to
$20 billion for executive bonuses. In view of this action
coming so quickly on the heels of the federal bailout money
issued to the company during the height of the financial crisis
last year, investors are responding by mounting major proxy
initiatives.

The Nathan Cummings Foundation and the Benedictine Sisters of Mt.
Angel, Oregon announced today that they have filed a shareholder
resolution urging the Board to review pay disparity at the
company and analyze the appropriateness of its spiraling pay
packages – packages that have an unprecedented impact on Wall
Street compensation in general

The resolution, which is expected to gather more co-sponsors, has
been filed early to challenge Goldman Sachs as the Board makes
final decisions on bonuses. It was filed to appear in the
2010 proxy and be voted on at the stockholder’s meeting.
Goldman Sachs had received resolutions calling for
shareholders to have an Advisory Vote on executive compensation
that received a 46% vote in favor, but the Board has resisted
implementing even that modest reform. Other investors may
also file resolutions calling for a “say on pay” or for
separation of board chair and CEO positions at Goldman
Sachs.

Laura Shaffer, who is director of shareholder activities of the
Nathan Cummings Foundation and one of the resolution’s
sponsors, stated: “This request is especially timely as Goldman
Sachs rushes to pay huge bonuses, setting an example that many
Wall Street firms will no doubt strive to emulate. As
shareholders, the ripple effects of this extraordinary
compensation are especially concerning. Executive
compensation accounts for a considerable portion of aggregate
earnings and as firms like Goldman hand over ever larger sums to
their executives, these spiraling pay packages will have
increasingly significant impacts on investors’ returns.”

Sister Judy Byron, who coordinates the faith-based Northwest
Coalition for Responsible Investment and is a longtime proponent
of this resolution, said: “Goldman Sachs’ announcement of
record bonuses is a stark reminder about how executive
compensation is spiraling out of control for many firms. It
is important that citizens and shareowners both act as voices of
reason. As Fortune reminded us in 2007, top executives earn
364 times the pay of the average worker. CEO pay increases
significantly for many executives even in rough times, while
layoffs skyrocket and pay for average employees stagnate.

Laura Berry, executive director of the Interfaith Council on
Corporate Responsibility, said: “As prudent investors, we
have a responsibility here to act as the conscience of Wall
Street, especially when it fails to do so on its own. How
is it possible that the year after billions of taxpayer’s dollars
helped companies like Goldman Sachs return to financial health,
this company shows absolutely no restraint? Goldman Sachs
is poised to become the poster child of the company that drives
income disparity in the United States.”

FULL RESOLUTION TEXT

Recent events have increased concerns about the extraordinarily
high levels of executive compensation at many U.S. corporations.
Concerns about the structure of executive compensation
packages have also intensified, with some suggesting that the
compensation system incentivized excessive risk-taking.

In a Forbes article on Wall Street pay, the director of the
Program on Corporate Governance at Harvard Law School noted that,
“compensation policies will prove to be quite costly—excessively
costly—to shareholders.” Another study by Glass Lewis &
Co. declared that compensation packages for the most highly paid
U.S. executives “have been so over-the-top that they have skewed
the standards for what’s reasonable.” That study also found
that CEO pay may be high even when performance is mediocre or
dismal.

In 2008, Federal Appeals Court Judge Richard Posner stated that,
“executive pay is out of control and the marketplace cannot be
trusted to rein it in.” Legislative attempts to address
executive compensation include the Excessive Pay Shareholder
Approval Act, which mandates that no employee’s compensation may
exceed 100 times the average compensation paid to all employees
of a given company unless at least 60% of shareholders vote to
approve such compensation.

A 2008 piece in BusinessWeek revealed that, “Chief executive
officers at companies in the Standard & Poor’s 500-stock
index earned more than $4,000 an hour each [in 2007].” It
also noted that an S&P 500 CEO had to work, on average,
approximately 3 hours in 2007 “to earn what a minimum wage worker
earned for the full year.”

A September 2007 study of Fortune 500 firms showed that top
executives’ pay averaged $10.8 million the previous year, or more
than 364 times the pay of the average U.S. worker. Another
study by the Economic Policy Institute found that between 1989
and 2007, average CEO pay rose by 163% while the wages of the
average worker in the United States rose by only 10%.

RESOLVED: shareholders request the Board’s Compensation Committee
initiate a review of our company’s executive compensation
policies and make available, upon request, a summary report of
that review by October 1, 2010 (omitting confidential information
and processed at a reasonable cost). We request that the
report include –

1. A comparison of the total compensation package of senior
executives and our employees’ median wage in the United States in
July 2000, July 2004 & July 2009.

2. An analysis of changes in the relative size of the gap and an
analysis and rationale justifying this trend.

3. An evaluation of whether our senior executive compensation
packages (including, but not limited to, options, benefits,
perks, loans and retirement agreements) are “excessive” and
should be modified to be kept within reasonable boundaries.

4. An explanation of whether sizable layoffs or the level of pay
of our lowest paid workers should result in an adjustment of
senior executive pay to “more reasonable and justifiable levels”
and whether Goldman Sachs should monitor this comparison going
forward.

ABOUT THE GROUPS

The Benedictine Sisters of Mt. Angel, Oregon have a 125 year
history of service to the poor, creating community, and promoting
stewardship of Earth.

The Nathan Cummings Foundation is rooted in the Jewish tradition
and committed to democratic values and social justice, including
fairness, diversity, and community. It seeks to build a
socially and economically just society that values nature and
protects the ecological balance for future generations; promotes
humane health care; and fosters arts and culture that enriches
communities.

The Interfaith Center on Corporate Responsibility (http://www.iccr.org)
is a coalition of nearly 300 faith-based institutional investors
representing over $100 billion in invested capital. ICCR members
bridge the divide between morality and markets by envisioning a
civic economy that integrates ethical, environmental and social
values. Inspired by faith, committed to action, ICCR members work
to build a just and sustainable global community.

The Northwest Coalition for Responsible Investment (NWCRI) is a
regional collaboration of 16 faith-based investors committed to
using their rights as shareholders to work with corporations
to promote economic, social and environmental justice.